Calgary housing prices forecast to grow in 2014

CALGARY - The Calgary Real Estate Board is forecasting house prices and sales to continue to climb in the resale market in 2014.

On Tuesday, the board released its preliminary forecast, saying prices are expected to rise by 4.3 per cent next year and MLS sales are expected to climb by 3.6 per cent from 2013.

Ann-Marie Lurie, CREB’s chief economist, said strong migration levels over the past two years have combined with strong employment, wage growth, and a tight rental market to support further gains in 2014.

“2013 has been a year that has exceeded expectations on all levels,” said Lurie. “This is the second year in a row that we’ve had double-digit increases in sales. Very strong activity. And this year that sales activity pushed above those long-term averages.

“Migration is expected to actually ease off from the levels we saw this year. So that 19,000 new migrants that came to Calgary this year, well two years in a row, is forecasted to drop to 15,000. So that is still a significant pullback. That’s one of those factors that eases off demand.”

According to the board, year-to-date up to Monday, there have been 22,710 MLS sales in the city which is a 10.97 per cent hike from the same period a year ago. The median price has risen by 5.30 per cent to $400,150 while the average sale price is up by 6.51 per cent to $456,762.

CREB’s full annual forecast takes place January 15.

Lurie said supply levels this year didn’t keep pace with rising demand which pushed the market to favour sellers. She said tight market conditions will continue in the near future but rising listings and increased competition from the new home sector will alleviate supply pressure and push the market to more balanced conditions in the latter part of the year.

Lurie also said potential increases in long-term lending rates should take the steam off the exceptionally strong price growth of this year.

Don Campbell, senior analyst with the Real Estate Investment Network, said it looks like another year of strength in 2014 for the city’s real estate market.

“The big story will be the average age of the new population that is moving here from outside the province. We will witness a new type of demand begin to emerge as two and three bedroom units will begin to see increase in demand as housing and rents become less affordable thus forcing this new and younger population to share accommodations,” he said. “In addition, the lack of affordable basement suite options will also drive rents up more quickly than they should be, and should hit a new record price in 2014.”

He said the lack of supply and high rents will move people more quickly into the home purchase mode.

“In other words, not having these affordable rental options will, ironically, push purchase demand and thus purchase prices up more quickly than expected,” explained Campbell. “The longer this important issue is shuffled around, the higher the price of property will become in Calgary and region.

“With all of the factors lining up as they are, we should be witnessing the Calgary housing market out-perform most others in the country and frankly out-perform its underlying economic fundamentals as the pendulum swings solidly into seller’s market territory later in the year.”

mtoneguzzi@calgaryherald.com

Twitter.com/MTone123

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